The Munich Re programme
Munich Re Programme
Evaluating the Economics of Climate Risks and Opportunities in the Insurance Sector
(Programme 5 of the Centre for Climate Change Economics and Policy)
A. Evidence of Current Economic Reaction to Adaptation and Mitigation Instruments and the Design of Future Financial Products to Support the associated New Markets (Start-Date: Oct 09)
LSE Lead: Dr Pauline Barrieu & Dr Umut Cetin
Post-Doctoral Research Officer: Dr Max Fehr
Mitigation and adaptation activities will bring about a plethora of new financial products, introducing new risks and opportunities into the financial sectors. This research package will explore the impacts of alternative approaches to carbon finance and emission trading for different industries, informing the design of trading schemes and new financial service products. The second phase of the package will investigate how better balance investment between mitigation and adaptation, survivability and sustainability from the perspective of market participants.
B. Quantifying the Uncertainty in Economic Impacts of Climate Change and Increasing the Economic Relevance of Climate Modelling
LSE Lead: Dr Simon Dietz & Professor Leonard Smith
Post-Doctoral Research Officers: Falk Niehorster & Anthony Millner
Both adaptation and mitigation planning involve the interpretation of scientific models. This package will provide a more realistic quantitative evaluation of the strengths and weaknesses of current climate information. It will lead to the long-term improvement of such information by providing an alternative design for climate model experiments, which targets information for decision support rather than the advancement of science. The immediate objective is to provide a firmer, less reactive basis for climate decisions, which admits the current level of uncertainty in economic impacts of climate change, thereby decreasing vulnerability due to over-confidence in the near term. The long-term objective is to widen the scope of climate science products to provide information of more relevance to insurance and adaptation activities.
C. Empirical Evidence of Climate Change Impacts on Extremes and Model Relevance
LSE Lead: Professor Leonard Smith & Professor Eric Neumayer
Research Officer: Fabian Barthel
To improve our ability to project future increases in extreme events and their associated losses, it is crucial to understand the affects on climate change and other drivers on losses today and the ability of models to represent these trends. This package will conduct comparative analyses of trends from the Munich Re NatCatService database and from Earth System Models. Information extracted and techniques developed in this package will support the creation of more informative projections of level of increase expected in future losses driven by global warming.
D. Quantitative Applied Climate Economics (Start-Date: Oct 09)
LSE Lead: Professor Leonard Smith
Open questions remain in how the insurance sector can exploit and evaluate the wide-ranging and rapidly growing range of “information” on the economic impacts of future climate change. This project aims to answer some of those questions; evaluating the skill in short-term to decadal forecasts of weather phenomena relevant to insurance, and assessing the impact of potential application of such forecasts for user groups.
E. Economic Impacts of Climate Change in Emerging Economies (Start-Date: Oct 09)
LSE Lead: Professor Nicholas Stern & Professor Leonard Smith
Post Doctoral Research Officer: Dr Nicola Ranger
This package will explore the range of likely economic impacts of climate change in emerging economies and opportunities for insurance and financial sectors to respond to these impacts. The first phase of the package will identify impacts of highest economic and business relevance. The second phase will consist of more specific and focussed studies to inform the management of these impacts. The package will incorporate aspects of decision-making under uncertainty and model interpretation from (A) and will provide a critical quantitative examination of options for adaptation response, such as micro-insurance.